Reversal complete as Senate sends tech tax repeal to governor

While repealing a tax on computer and software design services, Senate leaders on Thursday had to beat back attempts by some lawmakers to both raise the gas tax and eliminate the 3-cent gas tax increase that was part of the same transportation financing package that included the tech-tax.

By Colleen Quinn

The Patriot Ledger, Quincy, MA

By Colleen Quinn

Posted Sep. 26, 2013 at 12:01 AM
Updated Sep 26, 2013 at 11:39 PM

By Colleen Quinn

Posted Sep. 26, 2013 at 12:01 AM
Updated Sep 26, 2013 at 11:39 PM

BOSTON

» Social News

While repealing a tax on computer and software design services, Senate leaders on Thursday had to beat back attempts by some lawmakers to both raise the gas tax and eliminate the 3-cent gas tax increase that was part of the same transportation financing package that included the tech-tax.

The three Republicans in the Senate who tried to add the gas tax increase to the list of taxes on track for repeal were also unsuccessful in their attempts to unchain the gas tax from future increases tied to inflation.

Sen. Cynthia Creem, in her attempt to raise the gas tax further, argued that with the tech tax gone there will not be enough money to invest in transportation. Creem wanted to raise the current gas tax from 24 cents to 29 cents.

The tech tax was counted on to raise $160 million and was part of the $500 million tax package approved this summer, which included a 3-cent per gallon increase in the gas tax and $1 tax increase on tobacco products. Future gas tax increases are tied to inflation. The repeal bill now sits on Gov. Deval Patrick’s desk awaiting his signature.

Senate Ways and Means Chairman Stephen Brewer said the state will bet on larger than expected revenues to plug the budget hole left by retroactively repealing the new sales tax on computer services, which had been counted on for $161 million in the fiscal 2014 budget.

The bill to repeal the tax (H 3662) passed unanimously in the Senate, 38 to 0.

Like her House counterparts, Senate President Therese Murray said legislative leaders made a promise to revisit the tech-tax to see if the impact was broader than anticipated. Business leaders decried the sales tax as an innovation-killer for the state.

“Today, we kept that promise,” Murray said in a statement after the vote. “Through ongoing conversations with industry experts, it became clear that this sales tax was having an unanticipated negative effect on our technology industry and I am proud of the Senate for taking action.”

Before the repeal passed, the Senate debated 10 amendments.

Creem, a Newton Democrat, said her constituents ride the T, travel the roads, and care about social services. Last spring when the Legislature was debating transportation financing, they came to her to ask, “What are you doing to support the governor?” she said. Her constituents favored raising taxes to generate $1 billion a year for transportation.

Creem said she has voted for gas tax increases before because “I feel there is a nexus between the gas tax and transportation.”

She then admitted she did not expect the amendment to pass, or for a roll call vote to be taken. A few minutes later, Sen. Robert Hedlund, a Weymouth Republican, asked for a roll call vote on Creem’s amendment. It was defeated 11 to 26.

“At what point do we stop digging into the wallets of taxpayers?” Hedlund asked.

Hedlund called the Legislature’s move to automatically raise the gas tax based on the Consumer Price Index “repugnant” because future lawmakers will not be held accountable for the increases. Hedlund predicted CPI was on the verge of an increase because the Federal Reserve has kept it artificially low.

“That will have a direct impact on what we have done with this automatic increase. I think people will find it somewhat onerous,” Hedlund said. “Citizens of Massachusetts are not going to like this when they realize what’s hit them.”

Opponents of indexing the gas tax to inflation are also pushing a initiative petition to repeal the inflation adjusted gas tax at the ballot in 2014.

Sen. Patricia Jehlen, a Somerville Democrat, argued against eliminating the gas tax hike saying the state could not afford to continue to “ratchet down our revenues.” There are many programs that have not recovered from cuts in funding resulting from the recession, including early education, she said.

Tarr countered that state spending has outpaced personal spending by state residents, and taxpayers cannot afford any more taxes that eat into their budgets.

“If you want to accelerate the problems, continue to increase the gas tax,” he said.

The Senate also rejected a Republican amendment to audit the savings that were projected from the 2009 transportation reform act. Tarr said the Department of Transportation never realized the savings they were supposed to attain, and the Legislature continues to “pour more money into the system” without holding MassDOT accountable.